The Foreclosure Report – August 2011

Foreclosure Starts Driven Higher by Bank of America

Foreclosure filings and sales increase throughout most of our coverage are in August. Foreclosure starts jumped significantly, reversing what had been a declining trend over the past several months. Investors bought more properties on the courthouse steps in August than in July everywhere except in Washington. The number of properties Sold Back to Bank jumped significantly in Oregon, and also rose in California and Nevada.

Foreclosure starts (the first notice filed, either a Notice of Default or Notice of Trustee Sale depending on the state) rose in every state. This appears to have been primarily driven by Bank of America and related entities, where we saw an overall 116 percent increase from July to August. Wells Fargo and US Bank also saw an increases in foreclosure start filings, while filings by JP Morgan Chase and Citibank were essentially flat.

“Bank of America appears to be primarily responsible for the surge in foreclosure starts this month,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “Since their average time to foreclose has recently increased to more than a year, it is unclear that these foreclosure starts will lead to an increase in foreclosure sales anytime soon.”

Notice of Trustee Sale filings, up 15.0 percent from the prior month, reversed a four-month downward trend. Properties Sold Back to Bank (REO) continued a five-month decline, with an 8.0 percent drop from July to August, and a 42.8 percent drop from this time last year. Investors were more active in August, with properties Sold to 3rd Parties up 4.9 percent month-over-month and up 38.7 percent year-over-year. Time to foreclose in August was flat from July at 175 days but 15.0 percent longer than a year ago.

Notice of Default filings increased 69.5 percent to the highest level in a year. Notice of Trustee Sale filings were up more moderately, rising 6.0 percent month-over-month, but down 23.6 percent year-over-year. Cancellations were nearly flat, up just 1.9 percent from July. Activity on the courthouse steps increased in August. Properties Sold Back to Bank (REO) increased 12.3 percent from the prior month. Properties Sold to 3rd Parties rose 9.9 percent month-over-month, and 10.8 percent year-over-year. Time to Foreclose increased to 333 days in August, which is 49 days longer than a year ago.

Notice of Default filings jumped 44.2 percent month-over-month, but fell 13.6 percent year-over-year. Notice of Trustee Sale filings slipped for the fifth consecutive month, dropping 9.9 percent month-over-month, and 43.4 percent year-over-year. Investor activity increased in August. Properties Sold to 3rd Parties rose 19.8 percent from July, and 27.8 percent from last year. Cancellations declined for the fourth straight month, dropping 9.0 percent in August to the lowest level in 15 months. Time to Foreclose jumped 14.3 percent in August from July, reaching a new record of 368 days. The Time to Resell increased month-over-month for both Banks at 179 days and 3rd Party Investors at 108 days.

Notices of Default were up in August over July by 35.6 percent, but filing activity remains 45.8 percent below this time last year. Properties Sold Back to Bank (REO) rose dramatically, up 243.3 percent month-over-month, as Recontrust, a subsidiary of Bank of America, began to clear the 2,800 foreclosures it started in April. Properties Sold to 3rd Party investors were up as well, 46.0 percent month-over-month and 17.4 percent year-over-year. The Time to Foreclose dropped in August for the second month in a row, down 9 days from July to 150 days.

Washington saw a 3.4 percent increase in Notice of Trustee Sale filings in August from July, which reversed four months of consecutive declines. Activity on the courthouse steps slowed as foreclosures Sold Back to Bank (REO) dropped 29.4 percent month-over month, and foreclosures Sold to 3rd Parties, typically investors, were down 33.3 percent. Time to Foreclose was nearly flat in August at 104 days.